Sebi cracking down on IPOs

Mumbai: Capital market regulator is reviewing the process for initial public offerings, its chairman said on Thursday, a day after it banned seven small companies from fund-raising for what it said were IPO rule violations.

The Securities and Exchange Board of India (Sebi) said on Wednesday a probe revealed misuse or diversion of IPO proceeds, inadequate documentation and due diligence and possible trading violations on the day of listing.

The IPOs were launched between July and November and had raised about Rs450 crore ($84 million).

It also banned the directors of the seven companies from dealing in the securities market and told some of the merchant bankers they would not be able to handle new capital issues until further notice.

“We are happy that Sebi has taken such a bold step, which is an unprecedented action," Sageraj Bariya, managing partner of research house Equitorials, wrote in a note. “Sebi might be slightly late but it is definitely better than never."